London’s FTSE 100 jumps as Liz Truss mulls cost of living support package
London’s FTSE 100 jumped today driven by investors being reassured by new prime minister Liz Truss preparing to ramp up support for households and businesses this week.
The capital’s premier index added 0.18 per cent to reach 7,300.44 points, while the mid-cap domestically-focused FTSE 250 index, which is more aligned with the health of the UK economy, surged 1.03 per cent to 18,820.84 points.
Truss is reportedly set to announce a package of support to cushion the cost of living crisis, including freezing household energy bills at their existing level of around £2,000. Firms are also expected to receive help to offset elevated energy costs.
That expected additional support lifted sentiment in the City.
However, experts warned the pound could come under extra strain if Truss’s package fails to address the UK’s deteriorating economic outlook.
The pound last week sunk to its lowest level against the US dollar since the mid 1980s and has fallen sharply against the greenback over the past few months.
Pound to USD exchange rate
“The fear is that Truss makes policy mistakes that deepen the UK’s economic problems, and this leads to further sterling weakness,” Neil Wilson, chief market analyst at Markets.com, said.
Yields on government debt climbed further today driven by investors demanding greater compensation in exchange for exposure to the UK’s ailing economy.
Traders are also pricing in more rate hikes from the Bank of England as the central bank continues its fight against inflation, which is running at a 40 year high but could touch 20 per cent, according to some forecasters.
Housebuilders lifted London’s FTSE 100, with Persimmon and Berkeley Group climbing more than four per cent.
On the FTSE 250, sausage roll maker Greggs and pub chain JD Wetherspoon were bright spots, climbing more than seven per cent and four per cent respectively.
Oil prices were mixed, with Brent Crude down over two per cent but WTI dropping edging higher.